Software and Systems Quarterly Market Update
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Software and Systems Quarterly Market Update Presentation Transcript

  • 1. Strictly Private and ConfidentialSoftware and SystemsQuarterly Market UpdateJune 2011
  • 2. Macroeconomic Conditions – Effect on Technology Markets 35% Changes in Real GDP and IT Investment(1) 30%  IT spending remains highly correlated to economic growth 25%  On average from 1989 through 2010, changes in IT 20% Y/Year Change, by Quarter spending outpaced changes in GDP growth – and were generally a leading indicator of economic improvement 15%  U.S. Real GDP is forecasted to grow at an annual rate of 10% 3.0% in 2011 and 3.6% in 2012(2)…but economists remain 5% skeptical 0%  Record cash balances and access to robust capital markets 1995 2000 2005 2010 should continue to foster growth in productivity-enhancing -5% corporate IT investments -10% -15% -20% % Change in Real GDP % Change in IT Investment Unemployment(3)  The severity and duration of the most recent recession left 12% unemployment higher than either of the two prior downturns 10%  Unemployment hit a high of 10.1% in October 2009 and has Unemployment Rate since mildly abated, to 9.1% in May 2011 8% Recession Length Unemployment Rate Beginning (months) Beginning End 6% Jul 90 8 5.5% 7.8% 4% Mar 01 8 4.3% 6.3% Dec 07 19 4.9% 9.6% 2%  Recent concerns pertaining to a potential double-dip 0% recession are centered on the stubbornly high 90 93 96 99 02 05 08 11 19 19 19 19 20 20 20 20 unemployment rate Recessions1 (1) US Department of Commerce, Forrester Research, and CapitalIQ (2) RBC Economic Research, as of 6/2/11 (3) US Bureau of Labor Statistics and National Bureau of Economic Research
  • 3. Debt Capital Markets ConditionsFavorable interest rates will likely lead to record corporate debt issuance in 2011 Debt Market Commentary Historically Low Interest Rates 18%  The investment grade market is off to a robust start in 2011 with over 16% $400bn in supply priced across the corporate, financial, and SSA sectors in Q1’2011 14% 12%  Similarly, a strong pace of issuance in the leveraged finance and 10% Yield high yield markets has continued from 2010 to 2011 YTD given strong M&A activity and the refinancing of debt issued before the 8% crisis 6% 4%  Convertible bond issuance is on track to surpass 2010 levels, as issuers opportunistically issue equity at premiums to improved stock 2% market values 0% Jan-00 Apr-01 Jul-02 Oct-03 Jan-05 Apr-06 Jul-07 Oct-08 Jan-10 Apr-11  In general, historically low interest rates continue to power the debt BBB Index (%) BB Index (%) 3-Month LIBOR (%) 10 Year Treasury Rate markets IG Secondary Spread Performance Annual Technology Debt Issuance by Type ($ in millions) 700 IG Technology $78,053 600 $74,719 $73,476 IG Corporates $13,963 $7,143 $18,153 500 Spread (bps) $57,522 $53,040 $2,636 $23,861 400 $3,894 $15,454 $42,544 $40,604 300 $33,397 $5,150 $17,584 $14,132 $5,407 $17,773 200 $8,637 $9,162 $5,920 100 $15,336 $25,300 $23,350 $24,700 $22,400 $17,250 0 $8,150 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (1) 2006 2007 2008 2009 2010 2011 YTD Investment Grade High Yield Loans Convertible Notes2 Source: ML Index System, Bloomberg, S&P Leveraged Commentary & Data, and CapitalIQ (1) Debt issuance through 4/30/11
  • 4. Recent Technology Stock Price Performance Since the March 2009 market trough, technology stocks have outperformed the broader market350 Performance Since: March 2009 YTD Enterprise Applications 203% 13% SaaS 182% 11% Infrastructure / Storage 163% 15% Performances since March 2009 NASDAQ 106% 7% S&P 500 Enterprise Applications 7% 83% 172%300 Large Cap / PlatformInfrastructure 69% / Storage 2% 155% IT Security SaaS 40% 11% 141% NASDAQ 95% S&P 500 75% Large Cap / Platform 71%250 IT Security 63%20015010050Mar-09 May-09 Jul-09 Oct-09 Dec-09 Mar-10 May-10 Jul-10 Oct-10 Dec-10 Mar-11 May-11 3 Source: Factset as of 05/31/2011 Note: Based on RBC’s total universe of 90 public software & systems companies
  • 5. Valuation Matrix: Revenue Growth vs. EBITDA Margin Revenue Growth CY10 – CY11E <5% 5% - 10% 10% - 20% >20% Median 3 companies 11 companies 21 companies 8 companies MCRO-GB, SGE-GB, TrendMicro BMC, CA, PRGS, ADBE, SOW-DE, CTXS, NTCT, RHT, TIBX, AU-GB, VMW, SWI, SAP, JCOM, LPSN, MSFT, SYMC, WBSN, VRNT, SNPS, OTEX, INFA, TDC, INTU, JDAS, AAPL, GOOG, OPEN >25% CSCO ORCL, CHKP, ZIXI, VRSN, CNQR, EV/Revenue: 3.7x LOGM, IL, DSY-FR, ADSK, AVV-GB, EV/EBITDA: 11.1x EMC CY 11E EBITDA Margin Median EV/Revenue: 2.5x Median EV/Revenue: 2.6x Median EV/Revenue: 5.2x Median EV/Revenue: 4.7x Median EV/EBITDA: 8.1x Median EV/EBITDA: 8.2x Median EV/EBITDA: 14.8x Median EV/EBITDA: 14.1x 1 companies 4 companies 14 companies 13 companies BCSI CPWR, MANH, IBM, MENT CVLT, QSFT, BLKB, CSU, MCRS, PRO, PROJ, CRM, FTNT, KNXA, 15% - 25% RADS, FIRE, ULTI, CKSW, ARBA, TLEO, RP, ATHN, CTCT, TRAK, SQI, BBBB, VOCS, PMTC, CDNS NTAP, MKTG EV/Revenue: 2.6x EV/EBITDA: 12.3x Median EV/Revenue: 2.2x Median EV/Revenue: 2.2x Median EV/Revenue: 3.0x Median EV/Revenue: 4.7x Median EV/EBITDA: 11.2x Median EV/EBITDA: 9.5x Median EV/EBITDA: 13.4x Median EV/EBITDA: 22.6x 5 companies 5 companies 8 companies 8 companies PVSW, QTM, CDCS, DELL, HPQ FALC, AMSWA, SAAS, RTLX-IL, GUID, MSTR, AZPN, QADB, CALD, PEGA, QLIK, RNOW, VDSI, CYDE, <15% EV/Revenue: 2.0x SABA N, DMAN, CNVO SFSF, CSOD, SPSC EV/EBITDA: 27.4x Median EV/Revenue: 0.7x Median EV/Revenue: 1.7x Median EV/Revenue: 2.4x Median EV/Revenue: 6.8x Median EV/EBITDA: 4.6x Median EV/EBITDA: 73.3x Median EV/EBITDA: 19.4x Median EV/EBITDA: 35.4x EV/Revenue: 2.2x EV/Revenue: 2.2x EV/Revenue: 3.0x EV/Revenue: 4.7x Median EV/EBITDA: 8.1x EV/EBITDA: 9.5x EV/EBITDA: 14.8x EV/EBITDA: 22.6x Higher growth companies continue to receive richer multiples4 Source: Company filings, press releases, RBC Capital Markets institutional research and other Wall Street sources. Companies based on consensus estimates from FactSet. Updated 06/04/2011.
  • 6. Valuation Metrics, by Business Model and by Company Size By Business Model EV / ’11E Revenue EV / ’11E EBITDA The market continues to favor 5.0x 24.6x high-growth SaaS and recurring revenue subscription models 2.7x 11.2x License / Up Front Models SaaS / Subscription Models License / Up Front Models SaaS / Subscription Models By Company Size (LTM Revenue) ($ in millions) EV / ’11E Revenue EV / ’11E EBITDA 3.7x 3.3x 21.2x Larger companies are not 3.0x 2.7x necessarily rewarded with 13.6x higher valuation multiples 11.2x 9.8x < $250 $250 - $500 $500 - $999 $1,000+ < $250 $250 - $500 $500 - $999 $1,000+5 Source: CapitalIQ and Company filings as of 05/31/2011. Please see Appendix for companies included in the calculations
  • 7. Valuation Metrics, by Sub-Segment EV / ’11E Revenue 5.0x 3.0x 2.5x 2.5x 2.3x 2011E Median: 2.5x IT Security Infrastructure / Storage Large-Cap / Platform Enterprise Applications SaaS EV / ’11E EBITDA 24.6x 19.5x 13.2x 2011E Median: 11.5x 13.2x 8.7x IT Security Infrastructure / Storage Large-Cap / Platform Enterprise Applications SaaS Price / ’11E Earnings or Price / ’11E FCF(1) 32.2x 22.3x 20.6x 19.8x 2011E Median: 20.2x 12.8x (1) IT Security Infrastructure / Storage Large-Cap / Platform Enterprise Applications SaaS6 Source: FactSet and Company filings as of 05/31/2011. Please see Appendix for companies included in the calculations (1) Reflects Price/Free Cash Flow for SaaS companies, where Free Cash Flow is defined as cash flow from operations less capital expenditures
  • 8. Revenue Growth, by Business Model and by Company Size 2010 – 2011E Revenue Growth by Sub-Segment 21.6% 15.2% 13.4% 2011E Median: 12.3% 13.4% 8.0% Increasing adoption rates of SaaS-based solutions, particularly by IT Security Infrastructure / Storage Large-Cap / Platform Enterprise Applications SaaS small- and medium-sized businesses, continue to 2010 – 2011E Revenue Growth by Business Model drive higher growth 21.6% estimates for SaaS companies than other 12.9% segments License / Up Front Models SaaS / Subscription Models 2010 – 2011E Revenue Growth by Company Size As expected, larger 18.2% 15.5% companies with greater 2011E Median: 12.9% 14.2% 12.0% scale generally grow at lower rates < $250 $250 - $500 $500 - $999 $1,000+7 Source: FactSet and Company filings as of 05/31/2011. Please see Appendix for companies included in the calculations (1)
  • 9. Historic SaaS Valuation Multiples (1) Median EV / FTM Rev. Multiples 4.7x 4.7x 4.4x 4.3x 4.1x 4.0x 3.9x 3.9x 3.4x 3.5x 3.3x 3.2x 3.1x 3.0x 3.1x 3.1x 2.9x 2.9x SaaS-based models are trading 2.6x 2.7x 2.8x 2.8x 2.8x 2.7x 2.4x at or near two-year highs relative to both revenue and free cash flow May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Investors continue to place premium value on SaaS Market Cap / FCF Multiples (1) companies due to higher 33.0x 31.2x growth, recurring revenue and 28.8x 28.5x 29.2x strong operating leverage 26.6x 27.0x 27.0x 26.9x 26.8x 26.0x 25.7x 24.4x 24.8x 23.7x 23.8x 23.9x 23.0x 23.4x 23.2x 22.7x 22.7x 21.4x 20.5x 20.0x Recent SaaS IPOs such as Responsys and Cornerstone OnDemand have performed well May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-118 (1) Based on forward twelve months Wall Street consensus estimates. Free cash flow defined as cash flow from operations less capital expenditures Source: Company filings, press releases, and other Wall Street research. Please see Appendix for companies included in the calculations Enterprise Value (EV) = Equity Value + Total Debt + Preferred Stock + Minority Interest – Cash & Cash Equivalents
  • 10. P&L Metrics, by Revenue Size LTM Operating Margin LTM Research & Development (% of Revenue) 22.2% 14.3% 13.7% 11.5% As expected, larger companies 14.5% enjoy economies of scale, resulting in operating margins correlated with company size 4.2% < $250 million $250 - $999 million $1 billion + < $250 million $250 - $999 million $1 billion + LTM Sales & Marketing LTM G&A Economies of scale exist (% of Revenue) (% of Revenue) throughout the income 31.7% 14.6% 28.1% statement but are most 10.8% apparent in sales & marketing 21.5% and general & administrative expenses, and less in research 5.2% and development spend < $250 million $250 - $999 million $1 billion + < $250 million $250 - $999 million $1 billion +9 Source: CapitalIQ and company filings as of 05/31/2011. Please see Appendix for companies included in the calculations
  • 11. Technology M&A Trends Technology M&A – Transactions Since 2006 Key M&A Themes  M&A activity accelerated in 2010 Number of transactions Median deal size ($M) – Technology shifts (sector convergence, cloud / virtualization, mobility, social media) – Unprecedented cash balances, need for growth 619 595 – Volatile IPO market for smaller tech companies – Representative 2010 transactions included: • Intel entered security software market via 473 472 purchase of McAfee ($7.7B ) 404 (1) • HP – Significant M&A activity, including storage (3PAR), smart phones (Palm), security (ArcSight) 343 • Oracle’s aim for CRM, retail and e-commerce unity with the purchase of Art Technology ($1.0B) • SAP’s acquisition of Sybase ($5.8B) • Carlyle’s acquisition of CommScope ($3.9B) 167 • Consolidation in the marketing analytics sector, including IBM’s acquisition of Unica ($450M) and $35 $36 $40 $42 $27 $25 Teradata’s acquisition of Aprimo ($525M)  Trend continues in 2011 2006 2007 2008 2009 2010 2011 YTD – Tech Top 25 began the year with $530B in cash2 – Firms looking to expand into adjacent segments to supplement product portfolios Volume $140.4B $175.5B $76.1B $68.9B $100.6B $50.0B – Rising market valuations: stock valuable as currency, more expensive for buybacks – but rising valuation environment also gives smaller tech companies anLargest Transactions: exit opportunity through IPO Buyer Alcatel KKR HP Xerox Intel Microsoft – PE firms have significant capital to deploy – Recent transactions (announced or closed) include: • Attachmate’s acquisition of Novell ($2.2B) Target Lucent First Data EDS ACS McAfee Skype • Microsoft’s acquisition of Skype ($8.5B) • Apax Partners’ acquisitions of ERP players Value $18.9B $28.7B $17.0B $8.8B $7.7B $8.5B Activant and Epicor (combined $2.0B) 10 Source: CapitalIQ 1 2011 YTD is annualized as of 05/31/11 2 Ernst & Young, “Global technology M&A update,” 2011
  • 12. Technology M&A Consolidators Number of Acquisitions Since 2007 Selected Recent Transactions Google Sparkbuy, TalkBin, PushLife, Beatthatquote.com, Next New Networks, BeatThatQuote.com, Google 14 3 7 30 14 68 Widevine Technologies, ITA Software, Global IP Solutions, AdMob, reCAPTCHA, On2 IBM IBM 13 11 9 15 1 49 Netezza, Blade Network, Unica, CastIron, Cognos, DataMirror, Exeros, ILOG, Lombardi, Ounce Labs, OpenPages, Platform Solutions, SPSS, Telelogic, Transitive Corp, Microsoft Microsoft 17 17 8 3 3 48 Skype, InterGrid, Canesta, AVIcode, 90 Degree Software, Danger, DATAllegro, FAST, Greenfield Online, Komoku, Powerset, Zoomix Data Mastering Oracle 16 12 8 8 1 45 Oracle Art Technology, Datanomic, BEA, GoldenGate Software, mValent, Primavera, Relsys International, Skywire, Sun Microsystems, Virtual Iron, Phase Forward, Amberpoint HP 12 6 6 11 2 37 HP Printelligence, Vertica, 3Com, 3Par, ArcSight, Colubris, EDS, Exstream Software, IBRIX, Cisco 14 5 7 7 3 36 LeftHand, Neoware, Opsware, SPI Dynamics, TOWER, Palm, Melodeo Cisco Systems Newscale, Arch Rock, Jabber, Latigent, PostPath, Pure Digital, Pure Networks, Richard-Zeta EMC 11 5 5 4 7 32 Building Intelligence, Securent, Starent Networks, Tandberg, Tidal EMC Event Robot, Shavlik Tech, SlideRocket, Isilon Systems, Art Technology Group, Archer, Intel 3 2 7 9 4 25 Conchango, Configuresoft, Data Domain, Document Sciences, FastScale Technology, Intel Sungard 10 6 1 5 3 25 SySDSoft, Infineon (Wireless Solutions Business), McAfee, Wind River Systems, Freescale Semiconductor (French Division), Virtutech, RapidMind Sungard Dell 7 23 7 3 22 Stratix Consulting, Valuelink, PredictiveMetrics, GL TRADE, Fox River Execution Technology, Inmatrix Technology, Genix Systems, Delphi Technologies, Advanced Portfolio Technologies SAP 8 3 5 3 2 21 Dell Comepellent Technologies, ASAP, EqualLogic, Everdream, MessageOne, Silverback Technologies, Zing Systems, Perot, KACE Networks, Exanet VMWare 4 6 1 7 3 21 SAP Analysis and Forecasting AG, Business Objects, Outlooksoft, SAF Simulation, Sybase, Symantec 3 5 2 4 1 15 Triversity, TechniDATA VMWare Propero, B-Hive, Blue Lane, Trango Virtual Processors, Tungsten Graphics, SpringSource, CA 3 3 6 2 14 Zimbra, RTO, IT Management of EMC Symantec McAfee 2 3 3 21 11 Clearwell Systems,Altiris, Vontu, AppStream, SwapDrive, nSuite, MessageLabs, Mi5, GuardianEdge, PGP, VeriSign CA 0 20 40 60 80 Base Technologies, Optinuity, ID Focus, Eurekify, Orchestria, Cassatt, NetQoS, Oblicore, 2007 2008 2009 2010 2011 3tera, Nimsoft, 4Base Technology, Arcot Systems McAfee Sentrigo, tenCube, TD Securities, MX Logic, Solidcore Systems, Endeavor Security, Secure Computing, Lockdown Networks, Reconnex The desire for forward growth continues to be a key driver of M&A activity11 Source: Capital IQ, current as of 5/31/11
  • 13. Technology IPO Market Key Trends YTD 2011 Technology IPO Volume ($ in millions)  The technology sector is leading a rebounding IPO market, with 2011 issuance outpacing 2010 Momentum in the equity capital markets has continued in 2011, with twenty-one IPOs raising more than $3.6 billion YTD through May  Median company size and profitability levels remain high relative to 57 historical levels 45  IPO activity continued to rebound in 2010 as investors deployed previously-sidelined capital – and the momentum has continued in 36 2011 33 28 12  SaaS and social median / internet businesses dominate the IPO $10,139 21 backlog $7,570 14 $5,946 $4,703 $5,074 $3,952 $3,655 4 $1,834 $797 2003 2004 2005 2006 2007 2008 2009 2010 2011(1) Deal Value # of DealsYTD 2011 Median LTM Revenue & EBITDA at Time of IPO Technology IPO Filings & Withdrawals($ in millions) $209 $189 2 3 $153 2 4 5 10 2 $94 22 $82 $79 19 $73 4 1 16 15 $56 7 12 1 11 10 3 $38 8 7 6 4 5 $26 2 3 $13 $18 1 $7 $10 $7 $5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (1) (1) 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2004 2005 2006 2007 2008 2009 2010 2011 Median LTM Revenue ($M) Median LTM EBITDA ($M) Filed Deals Withdrawn Deals12 Source: Dealogic Excluding IPOs less than $15.0 million (1) YTD figure, through May 2011
  • 14. Appendix
  • 15. IT Security Public Comparables (Figures in Millions, except per share data) US$ Price % of 52 Market Ent. EV / Revenue EV / EBITDA Price / EPS Company Ticker 2011/05/31 Week High Cap. (1) Debt Cash Value (2) 2010A 2011E 2012E 2010A 2011E 2012E 2010A 2011E 2012EIT SecuritySymantec SYMC $19.55 95% $14,936 $2,561 $2,452 $15,045 2.5x 2.3x 2.2x 9.0x 6.8x 6.2x 24.8x 12.6x 11.1xCheck Point CHKP $54.92 98% $12,019 $0 $1,083 $10,936 10.0x 8.9x 8.1x 18.4x 14.9x 13.5x 25.8x 19.8x 17.7xTrend Micro Inc. 4704 $30.40 89% $4,060 $1 $1,439 $2,622 2.4x 2.2x 2.1x 7.6x 6.5x 5.9x 28.1x 21.6x 19.6xFortinet Inc FTNT $24.25 98% $2,172 $0 $302 $1,871 5.8x 4.7x 4.0x 30.6x 20.6x 16.6x NM NM NMBlue Coat Systems BCSI $22.95 71% $1,204 $79 $350 $933 1.9x 1.9x 1.8x 9.9x 10.0x 9.9x 17.5x 19.6x 18.7xWebsense WBSN $24.85 89% $1,009 $63 $79 $993 3.0x 2.7x 2.6x 14.5x 10.4x 10.4x NM 16.1x 14.7xSourcefire FIRE $26.71 81% $795 $0 $54 $740 5.7x 4.8x 4.0x 42.0x 32.0x 21.9x 38.6x NM 38.9xVASCO Data Security VDSI $11.94 81% $462 $0 $86 $376 3.5x 2.6x 2.4x 25.3x 22.3x 18.9x 42.3x 37.1x 29.4xZix ZIXI $3.81 78% $274 $0 $25 $250 7.6x 6.4x 5.4x 38.1x 19.5x 15.6x 29.3x 24.7x 19.4xGuidance Software GUID $8.03 92% $203 $0 $25 $178 1.9x 1.8x 1.6x NM NM 46.6x NM NM 31.9xAbsolute Software *ABT $4.54 98% $202 $0 $31 $171 2.6x 2.2x 2.0x NM 21.7x 22.6x NM NM NMCyberDefender Corporation CYDE $1.84 38% $62 $9 $6 $65 1.4x 0.9x NA NM 33.5x NA NM NM NA Median: 2.8 x 2.5 x 2.4 x 18.4 x 19.5 x 15.6 x 28.1 x 19.8 x 19.4 x Mean: 4.0 x 3.5 x 3.3 x 21.7 x 18.0 x 17.1 x 29.5 x 21.6 x 22.4 x MRQ EBITDA Revenue Revenue Growth Gross EBITDA Margin EPS 5yr EPS Company 2010A 2011E 2012E 10-11 11-12 Margin 2010A 2011E 2012E 2010A 2010A 2011E 2012E GrowthIT SecuritySymantec $6,048 $6,523 $6,926 8% 6% 85% $1,680 $2,215 $2,431 28% $0.79 $1.56 $1.76 9%Check Point $1,098 $1,228 $1,349 12% 10% 89% $594 $736 $809 54% $2.13 $2.78 $3.10 11%Trend Micro Inc. $1,088 $1,204 $1,272 11% 6% 82% $346 $401 $447 32% $1.08 $1.41 $1.55 NAFortinet Inc $325 $399 $463 23% 16% 75% $61 $91 $113 19% $0.13 $0.35 $0.42 18%Blue Coat Systems $500 $480 $506 (4%) 6% 78% $95 $93 $95 19% $1.31 $1.17 $1.23 12%Websense $333 $364 $380 9% 4% 83% $69 $95 $95 21% $0.43 $1.54 $1.69 15%Sourcefire $131 $153 $185 17% 21% 79% $18 $23 $34 13% $0.69 $0.46 $0.69 22%VASCO Data Security $108 $144 $158 33% 10% 62% $15 $17 $20 14% $0.28 $0.32 $0.41 NAZix $33 $39 $46 18% 19% 81% $7 $13 $16 20% $0.13 $0.15 $0.20 23%Guidance Software $92 $101 $111 10% 9% 68% $0 $1 $4 0% ($0.20) $0.15 $0.25 NAAbsolute Software $66 $76 $85 15% 11% 72% $2 $8 $8 3% ($0.14) ($0.04) ($0.02) NACyberDefender Corporation $46 $71 NA 55% NA 54% ($37) $2 NA NM ($1.49) ($0.27) NA NA Median: 13% 10% 78% 19% 15% Mean: 17% 11% 76% 20% 16%14 Source: Company filings, press releases, RBC Capital Markets institutional research, and other Wall Street sources. NM = Not Meaningful. NA = Not Available (1) Based on fully diluted shares outstanding using the Treasury Stock Method (TSM) (2) Enterprise Value = Equity Value + Total Debt + Preferred Stock + Minority Interest – Cash & Cash Equivalents
  • 16. IT Management / Infrastructure / Storage Public Comparables (Figures in Millions, except per share data) US$ Price % of 52 Market Ent. EV / Revenue EV / EBITDA Price / EPS Company Ticker 2011/05/31 Week High Cap. (1) Debt Cash Value (2) 2010A 2011E 2012E 2010A 2011E 2012E 2010A 2011E 2012E IT Management / Infrastructure / Storage VMWare VMW $97.32 98% $43,688 $450 $3,662 $40,476 14.2x 11.2x 9.4x NM 30.8x 25.6x NM 49.3x 41.6x Citrix Systems CTXS $87.62 99% $17,059 $8 $930 $16,137 8.6x 7.5x 6.6x 35.1x 23.4x 20.6x NM 36.3x 31.8x CA CA $23.40 91% $11,855 $1,555 $2,589 $10,821 2.4x 2.3x 2.2x 6.8x 6.1x 5.8x 16.0x 11.2x 10.3x BMC Software BMC $55.83 100% $10,201 $352 $1,689 $8,864 4.4x 4.0x 3.7x 12.9x 9.3x 8.5x 22.5x 17.5x 15.8x Teradata Corporation TDC $55.79 99% $9,770 $300 $778 $9,292 4.8x 4.1x 3.8x 19.6x 16.2x 13.7x 31.6x 25.2x 22.0x Red Hat RHT $43.60 89% $8,868 $0 $861 $8,007 9.1x 7.7x 6.7x 43.2x 25.7x 22.3x NM 46.5x 39.7x Informatica INFA $58.66 99% $7,479 $0 $553 $6,927 10.7x 9.0x 7.8x 45.2x 32.6x 27.2x NM 43.2x 36.1x Autonomy AU-GB $29.58 97% $7,303 $771 $1,068 $7,006 8.0x 6.9x 6.0x 17.0x 14.3x 11.9x 33.3x 24.4x 19.9x Tibco Software TIBX $28.09 91% $5,162 $41 $262 $4,941 6.5x 5.7x 5.1x 28.8x 19.6x 17.3x NM 30.5x 26.1x Software AG SOW-DE $55.75 87% $4,757 $378 $204 $4,931 3.3x 2.9x 2.7x 11.9x 9.8x 9.0x 20.5x 15.3x 13.8x Open Text OTEX $65.25 97% $3,846 $299 $238 $3,907 4.2x 3.6x 3.2x 12.7x 12.0x 10.2x 30.7x 15.0x 13.0x Qlik Technologies QLIK $33.29 100% $3,078 $0 $177 $2,901 12.8x 9.5x 7.6x NM NM 42.6x NM NM NM Compuware Corp. CPWR $10.19 83% $2,282 $0 $82 $2,200 2.4x 2.2x 2.0x 12.1x 9.1x 8.0x 20.9x 17.8x 14.7x Commvault Systems CVLT $41.34 98% $2,070 $0 $194 $1,877 6.3x 5.3x 4.7x 47.1x 29.9x 24.9x NM 49.0x 41.6x Quest Software QSFT $22.70 80% $2,032 $33 $357 $1,708 2.2x 2.0x 1.8x 10.4x 8.8x 7.6x 21.5x 16.6x 13.5x SolarWinds SWI $24.65 99% $2,006 $0 $143 $1,863 12.2x 9.9x 8.2x 27.6x 20.0x 16.7x 40.1x 28.2x 23.8x Progress Software PRGS $27.07 86% $1,908 $1 $371 $1,538 2.9x 2.7x 2.5x 10.0x 7.8x 6.6x 33.2x 15.1x 13.5x MicroStrategy Inc. MSTR $146.19 98% $1,649 $0 $203 $1,446 3.2x 2.7x 2.4x 22.8x 26.3x 19.6x 39.3x NM 32.6x Pegasystems PEGA $37.35 90% $1,409 $0 $87 $1,322 3.9x 3.0x 2.6x NM 21.4x 17.2x NM 31.9x 25.6x Micro Focus International plc MCRO-GB $6.17 76% $1,221 $73 $33 $1,261 2.9x 2.9x 2.9x 7.8x 8.0x 7.8x 11.6x 11.7x 11.2x Netscout Systems NTCT $23.20 83% $1,018 $68 $201 $886 3.1x 2.8x 2.5x 13.8x 10.4x 8.7x 29.9x 20.1x 17.6x Quantum Corp. QTM $3.07 69% $751 $280 $91 $940 1.4x 1.4x 1.3x 13.6x NA NA NM 14.6x 12.6x Falconstor Software FALC $4.40 85% $205 $0 $42 $163 2.0x 1.8x 1.6x NM NA NA NM NM NM Guidance Software GUID $8.03 92% $203 $0 $25 $178 1.9x 1.8x 1.6x NM NM 46.6x NM NM 31.9x InfoVista SA IFV-FR $7.04 93% $116 $0 $37 $79 1.3x 1.1x 1.0x 16.3x 8.4x 7.3x 29.9x 19.6x 15.3x Pervasive Software PVSW $6.45 88% $109 $0 $37 $71 1.5x 1.4x 1.3x 13.7x 10.4x 7.9x 37.2x 26.9x 20.4x Versant VSNT $12.70 89% $41 $0 $25 $16 1.0x NA NA 5.9x NA NA 26.3x NA NA Unify UNFY $2.50 66% $36 $27 $4 $59 1.4x NA NA 9.6x NA NA NM NA NA Median: 3.3 x 3.0 x 2.8 x 13.7 x 13.2 x 12.8 x 29.9 x 22.3 x 20.2 x Mean: 5.0 x 4.4 x 3.9 x 19.3 x 16.4 x 16.4 x 27.8 x 25.7 x 22.7 x15 Source: Company filings, press releases, RBC Capital Markets institutional research, and other Wall Street sources. NM = Not Meaningful. NA = Not Available (1) Based on fully diluted shares outstanding using the Treasury Stock Method (TSM) (2) Enterprise Value = Equity Value + Total Debt + Preferred Stock + Minority Interest – Cash & Cash Equivalents
  • 17. IT Management / Infrastructure / Storage Public Comparables (cont’d) (Figures in Millions, except per share data) MRQ EBITDA Revenue Revenue Growth Gross EBITDA Margin EPS 5yr EPS Company 2010A 2011E 2012E 10-11 11-12 Margin 2010A 2011E 2012E 2010A 2010A 2011E 2012E GrowthIT Management / Infrastructure / StorageVMWare $2,857 $3,626 $4,322 27% 19% 82% $689 $1,312 $1,579 24% $0.84 $1.97 $2.34 25%Citrix Systems $1,875 $2,165 $2,454 15% 13% 91% $460 $688 $785 25% $1.46 $2.42 $2.76 16%CA $4,469 $4,703 $4,948 5% 5% NA $1,591 $1,767 $1,879 36% $1.46 $2.10 $2.28 11%BMC Software $1,994 $2,204 $2,391 11% 8% 76% $686 $952 $1,047 34% $2.48 $3.20 $3.53 20%Teradata Corporation $1,936 $2,246 $2,473 16% 10% 54% $475 $575 $677 25% $1.77 $2.22 $2.54 13%Red Hat $877 $1,037 $1,193 18% 15% 83% $186 $312 $359 21% $0.51 $0.94 $1.10 20%Informatica $650 $769 $890 18% 16% 83% $153 $212 $254 24% $0.83 $1.36 $1.62 19%Autonomy $870 $1,010 $1,173 16% 16% 88% $413 $490 $589 47% $0.89 $1.21 $1.49 NATibco Software $764 $873 $974 14% 12% 71% $172 $252 $286 22% $0.46 $0.92 $1.07 12%Software AG $1,481 $1,704 $1,811 15% 6% 58% $414 $502 $547 28% $2.71 $3.64 $4.04 NAOpen Text $938 $1,091 $1,211 16% 11% 73% $309 $325 $381 33% $2.12 $4.36 $5.01 15%Qlik Technologies $227 $305 $381 35% 25% 88% $30 $44 $68 13% $0.21 $0.33 $0.51 38%Compuware Corp. $909 $989 $1,079 9% 9% 68% $182 $243 $275 20% $0.49 $0.57 $0.70 8%Commvault Systems $299 $352 $403 18% 15% 87% $40 $63 $75 13% $0.48 $0.84 $0.99 21%Quest Software $767 $866 $962 13% 11% 88% $164 $193 $226 21% $1.06 $1.37 $1.68 NASolarWinds $152 $189 $227 24% 20% 94% $68 $93 $112 44% $0.61 $0.88 $1.04 20%Progress Software $531 $570 $616 7% 8% 85% $153 $197 $232 29% $0.81 $1.80 $2.01 15%MicroStrategy Inc. $455 $536 $604 18% 13% 73% $63 $55 $74 14% $3.72 $2.83 $4.48 21%Pegasystems $337 $440 $514 31% 17% 61% $16 $62 $77 5% ($0.16) $1.17 $1.46 23%Micro Focus International plc $433 $434 $441 0% 2% 86% $162 $158 $161 37% $0.53 $0.53 $0.55 NANetscout Systems $284 $319 $361 12% 13% 79% $64 $86 $102 23% $0.78 $1.15 $1.32 16%Quantum Corp. $672 $685 $725 2% 6% 42% $69 NA NA 10% $0.01 $0.21 $0.24 18%Falconstor Software $83 $91 $100 9% 10% 73% ($12) NA NA NM ($0.78) ($0.18) $0.02 NAGuidance Software $92 $101 $111 10% 9% 68% $0 $1 $4 0% ($0.20) $0.15 $0.25 NAInfoVista SA $60 $71 $78 18% 10% 79% $5 $9 $11 8% $0.24 $0.36 $0.46 NAPervasive Software $46 $49 $54 7% 9% 86% $5 $7 $9 11% $0.17 $0.24 $0.32 NAVersant $16 NA NA NA NA 87% $3 NA NA 17% $0.48 NA NA NAUnify $42 NA NA NA NA 72% $6 NA NA 15% ($0.02) NA NA NA Median: 15% 11% 79% 22% 18% Mean: 15% 12% 77% 22% 18%16 Source: Company filings, press releases, RBC Capital Markets institutional research, and other Wall Street sources. NM = Not Meaningful. NA = Not Available (1) Based on fully diluted shares outstanding using the Treasury Stock Method (TSM) (2) Enterprise Value = Equity Value + Total Debt + Preferred Stock + Minority Interest – Cash & Cash Equivalents
  • 18. Large-Cap / Platform Public Comparables (Figures in Millions, except per share data) US$ Price % of 52 Market Ent. EV / Revenue EV / EBITDA Price / EPS Company Ticker 2011/05/31 Week High Cap. (1) Debt Cash Value (2) 2010A 2011E 2012E 2010A 2011E 2012E 2010A 2011E 2012ELarge-Cap / PlatformMicrosoft MSFT $25.01 85% $210,965 $13,165 $48,717 $175,413 2.6x 2.4x 2.3x 6.0x 5.6x 5.2x 10.4x 9.4x 8.5xInternational Business Machines IBM $168.93 97% $209,848 $30,383 $13,279 $226,952 2.3x 2.1x 2.1x 9.6x 8.7x 8.7x 14.7x 12.8x 12.8xOracle ORCL $34.22 94% $178,585 $15,153 $24,355 $169,383 5.2x 4.5x 4.2x 12.3x 9.7x 8.8x 24.8x 14.9x 13.5xCisco CSCO $16.80 65% $92,870 $30,383 $13,279 $109,974 2.6x 2.5x 2.5x 10.5x 8.7x 8.7x 12.3x 10.2x 10.2xHewlett Packard HPQ $37.38 76% $83,406 $30,383 $13,279 $100,510 0.8x 0.8x 0.8x 5.6x 5.2x 5.2x 9.3x 7.3x 7.3xSAP SAP $62.17 91% $73,895 $5,470 $6,349 $73,016 4.4x 3.6x 3.3x 13.5x 10.5x 9.4x 30.9x 16.4x 14.5xEMC EMC $28.47 99% $60,862 $4,256 $5,594 $59,524 3.5x 3.0x 2.7x 15.1x 11.2x 10.2x 32.2x 19.2x 16.5x Median: 2.6 x 2.5 x 2.5 x 10.5 x 8.7 x 8.7 x 14.7 x 12.8 x 12.8 x Mean: 3.1 x 2.7 x 2.6 x 10.4 x 8.5 x 8.0 x 19.2 x 12.9 x 11.9 x MRQ EBITDA Revenue Revenue Growth Gross EBITDA Margin EPS 5yr EPS Company 2010A 2011E 2012E 10-11 11-12 Margin 2010A 2011E 2012E 2010A 2010A 2011E 2012E GrowthLarge-Cap / PlatformMicrosoft $66,690 $72,008 $77,188 8% 7% 76% $29,159 $31,191 $33,765 44% $2.40 $2.67 $2.93 10%International Business Machines $99,870 $105,716 $105,716 6% 0% 44% $23,622 $26,007 $26,007 24% $11.52 $13.18 $13.18 11%Oracle $32,780 $37,525 $40,520 14% 8% 77% $13,817 $17,416 $19,286 42% $1.38 $2.30 $2.53 16%Cisco $42,164 $44,199 $44,199 5% 0% 62% $10,467 $12,642 $12,642 25% $1.37 $1.65 $1.65 9%Hewlett Packard $126,465 $130,418 $130,418 3% 0% 25% $17,830 $19,210 $19,210 14% $4.00 $5.11 $5.11 9%SAP $16,475 $20,134 $22,016 22% 9% 65% $5,405 $6,928 $7,741 33% $2.01 $3.80 $4.30 14%EMC $17,015 $19,810 $22,215 16% 12% 59% $3,935 $5,292 $5,862 23% $0.88 $1.49 $1.73 16% Median: 8% 7% 62% 25% 11% Mean: 11% 5% 58% 29% 12%17 Source: Company filings, press releases, RBC Capital Markets institutional research, and other Wall Street sources. NM = Not Meaningful. NA = Not Available (1) Based on fully diluted shares outstanding using the Treasury Stock Method (TSM) (2) Enterprise Value = Equity Value + Total Debt + Preferred Stock + Minority Interest – Cash & Cash Equivalents
  • 19. Enterprise Applications Public Comparables (Figures in Millions, except per share data) US$ Price % of 52 Market Ent. EV / Revenue EV / EBITDA Price / EPS Company Ticker 2011/05/31 Week High Cap. (1) Debt Cash Value (2) 2010A 2011E 2012E 2010A 2011E 2012E 2010A 2011E 2012EEnterprise ApplicationsAutodesk ADSK $42.98 93% $10,020 $0 $1,274 $8,746 4.6x 4.0x 4.0x 25.2x 15.5x 15.5x 48.3x 26.0x 26.0xDassault Systèmes DSY-FR $84.98 98% $10,299 $405 $1,414 $9,290 4.5x 3.7x 3.7x 15.9x 12.0x 12.0x 35.3x 21.0x 21.0xSage Group plc SGE-GB $4.78 97% $6,288 $303 $185 $6,405 2.8x 2.6x 2.5x 10.1x 9.6x 9.0x 17.6x 14.3x 13.2xAnsys ANSS $57.37 100% $5,473 $154 $550 $5,077 8.7x 7.7x 7.7x 18.1x 11.8x 11.8x 34.9x 24.2x 24.2xMICROS Systems, Inc. MCRS $51.06 96% $4,319 $6 $749 $3,576 3.7x 3.4x 3.0x 17.3x 14.2x 12.3x 33.0x 26.0x 22.1xParametric Technology PMTC $23.29 92% $2,806 $0 $260 $2,546 2.5x 2.2x 2.2x 19.6x 10.7x 10.7x NM 18.1x 18.1xAveva Group AVV-GB $27.44 98% $1,873 $0 $227 $1,646 6.4x 5.3x 5.3x 19.5x 16.1x 16.1x 35.3x 26.5x 26.5xConstellation Software Inc. CSU-CA $77.15 100% $1,635 $86 $58 $1,663 2.6x 2.3x 2.1x 10.2x 11.2x 10.2x 39.1x 14.4x 13.3xAspen Technology AZPN $16.55 97% $1,616 $56 $151 $1,521 8.6x 7.1x 5.6x NM NM NM NM NM NMMentor Graphics MENT $13.41 81% $1,471 $281 $190 $1,562 1.8x 1.6x 1.6x 14.7x 7.6x 7.6x NM 13.6x 13.6xJDA Software JDAS $33.03 94% $1,419 $273 $226 $1,466 2.4x 2.2x 2.0x 9.9x 8.1x 7.3x NM 15.5x 13.2xBlackbaud BLKB $28.15 93% $1,226 $0 $24 $1,201 3.7x 3.2x 2.9x 21.4x 13.6x 12.3x 41.4x 26.3x 23.7xRadiant Systems Inc. RADS $21.00 99% $911 $14 $89 $836 2.4x 2.2x 1.9x 16.6x 13.6x 11.3x 35.7x 20.6x 17.9xManhattan Associates MANH $35.95 97% $823 $0 $118 $706 2.4x 2.2x 1.9x 13.8x 10.4x 8.6x 28.8x 19.0x 16.9xDeltek PROJ $7.45 86% $486 $197 $70 $613 2.2x 1.7x 1.6x 23.0x 9.8x 7.6x NM 22.9x 14.7xRetalix Ltd. RTLX-IL $14.64 92% $354 $5 $140 $219 1.1x 1.0x 0.9x 12.0x NA NA 33.3x 19.1x 15.0xClickSoftware Technologies CKSW $10.66 97% $352 $0 $51 $300 4.2x 3.6x 3.1x 24.5x 16.6x 14.0x 37.8x 22.4x 17.3xSaba SABA $9.89 93% $312 $1 $32 $281 2.5x 2.3x 2.0x NM NM 38.6x NM NM NMCallidus Software CALD $5.89 82% $207 $3 $29 $181 2.5x 2.3x 2.0x NM 35.7x 18.2x NM NM 33.7xAmerican Software AMSWA $7.68 96% $207 $0 $42 $165 2.1x 1.9x 1.7x 12.7x NA NA 33.7x 24.8x 20.2xQAD QADB $10.36 58% $185 $16 $67 $135 0.6x 0.6x 0.5x 10.6x 6.0x NA NM 15.3x 12.5xCDC Software Corporation CDCS $4.83 52% $138 $16 $45 $109 0.5x 0.5x 0.5x 2.6x 3.8x 3.3x 21.4x 6.7x 5.4x Median: 2.5 x 2.3 x 2.1 x 15.9 x 11.5 x 11.5 x 35.1 x 20.6 x 17.6 x Mean: 3.3 x 2.9 x 2.7 x 15.7 x 12.6 x 12.6 x 34.0 x 19.8 x 18.4 x18 Source: Company filings, press releases, RBC Capital Markets institutional research, and other Wall Street sources. NM = Not Meaningful. NA = Not Available (1) Based on fully diluted shares outstanding using the Treasury Stock Method (TSM) (2) Enterprise Value = Equity Value + Total Debt + Preferred Stock + Minority Interest – Cash & Cash Equivalents
  • 20. Enterprise Applications Public Comparables (cont’d) (Figures in Millions, except per share data) MRQ EBITDA Revenue Revenue Growth Gross EBITDA Margin EPS 5yr EPS Company 2010A 2011E 2012E 10-11 11-12 Margin 2010A 2011E 2012E 2010A 2010A 2011E 2012E GrowthEnterprise ApplicationsAutodesk $1,916 $2,171 $2,171 13% 0% 91% $348 $566 $566 18% $0.89 $1.65 $1.65 16%Dassault Systèmes $2,069 $2,498 $2,498 21% 0% 86% $586 $774 $774 28% $2.41 $4.05 $4.05 NASage Group plc $2,253 $2,473 $2,593 10% 5% 93% $636 $669 $715 28% $0.27 $0.33 $0.36 NAAnsys $580 $662 $662 14% 0% 88% $280 $429 $429 48% $1.64 $2.37 $2.37 14%MICROS Systems, Inc. $958 $1,058 $1,183 10% 12% 56% $207 $251 $291 22% $1.55 $1.96 $2.31 18%Parametric Technology $1,018 $1,168 $1,168 15% 0% 70% $130 $237 $237 13% $0.16 $1.29 $1.29 13%Aveva Group $258 $309 $309 20% 0% 80% $85 $102 $102 33% $0.78 $1.04 $1.04 NAConstellation Software Inc. $631 $733 $788 16% 8% 32% $163 $149 $163 26% $1.97 $5.37 $5.78 NAAspen Technology $177 $214 $270 21% 26% 80% ($78) ($32) $15 NM ($0.87) ($0.37) ($0.03) 13%Mentor Graphics $891 $996 $996 12% 0% 86% $106 $207 $207 12% $0.21 $0.99 $0.99 15%JDA Software $617 $681 $747 10% 10% 60% $148 $180 $200 24% $0.42 $2.13 $2.50 NABlackbaud $327 $370 $407 13% 10% 58% $56 $88 $98 17% $0.68 $1.07 $1.19 10%Radiant Systems Inc. $346 $385 $431 11% 12% 48% $50 $61 $74 15% $0.59 $1.02 $1.17 14%Manhattan Associates $297 $325 $362 10% 11% 55% $51 $68 $82 17% $1.25 $1.90 $2.13 NADeltek $280 $356 $395 27% 11% 62% $27 $62 $80 10% ($0.08) $0.33 $0.51 10%Retalix Ltd. $207 $227 $250 9% 10% 42% $18 NA NA 9% $0.44 $0.77 $0.98 NAClickSoftware Technologies $71 $83 $97 18% 16% 61% $12 $18 $21 17% $0.28 $0.48 $0.62 38%Saba $113 $123 $138 9% 12% 64% $5 $3 $7 4% ($0.07) $0.02 $0.07 25%Callidus Software $71 $80 $89 13% 11% 40% ($6) $5 $10 NM ($0.40) $0.07 $0.18 20%American Software $79 $87 $95 10% 9% 51% $13 NA NA 16% $0.23 $0.31 $0.38 NAQAD $217 $242 $263 12% 9% 56% $13 $23 NA 6% $0.19 $0.68 $0.83 NACDC Software Corporation $213 $223 $237 5% 6% 53% $41 $29 $33 19% $0.23 $0.73 $0.90 -14% Median: 12% 9% 60% 17% 14% Mean: 14% 8% 64% 19% 15%19 Source: Company filings, press releases, RBC Capital Markets institutional research, and other Wall Street sources. NM = Not Meaningful. NA = Not Available (1) Based on fully diluted shares outstanding using the Treasury Stock Method (TSM) (2) Enterprise Value = Equity Value + Total Debt + Preferred Stock + Minority Interest – Cash & Cash Equivalents
  • 21. SaaS Public Comparables(Figures in Millions, except per share data) US$ Price % of 52 Market Ent. EV / Revenue EV / EBITDA Price / EPS P / FCF (3) Company Ticker 05/31/11 Week High Cap. (1) Debt Cash Value (2) 2010A 2011E 2012E 2010A 2011E 2012E 2010A 2011E 2012E 2010A 2011ESaaSSalesforce.com CRM $152.26 99% $21,660 $492 $497 $21,655 13.3x 10.2x 8.3x NM NM 39.7x NM NM NM NM NMAriba ARBA $33.54 94% $3,249 $0 $198 $3,051 8.0x 6.8x 5.9x 37.9x 30.0x 21.9x 43.1x 38.8x 29.9x NM 45.7xSuccessFactors SFSF $35.07 87% $2,950 $0 $367 $2,582 12.5x 9.2x 7.7x NM NM NM NM NM NM NM NMConcur CNQR $49.97 86% $2,740 $234 $567 $2,407 7.8x 6.5x 5.4x 27.8x 24.1x 18.1x NM NM 43.1x 45.3x 44.2xNetSuite N $37.74 99% $2,672 $0 $112 $2,560 13.3x 11.1x 9.4x NM NM NM NM NM NM NM NMOpenTable OPEN $88.33 74% $2,246 $0 $55 $2,190 22.1x 14.9x 11.4x NM 39.9x 27.9x NM NM NM NM NMRealPage RP $29.45 86% $2,262 $63 $124 $2,201 11.7x 8.6x 7.0x NM 37.7x 28.1x NM NM NM NM NMAthenahealth ATHN $44.77 89% $1,624 $8 $103 $1,529 6.2x 4.9x 3.9x 30.0x 25.2x 18.8x NM NM 41.0x NM NMTaleo TLEO $37.33 98% $1,572 $0 $146 $1,426 5.9x 4.6x 4.0x 22.5x 22.2x 18.1x 47.9x 40.0x 33.3x NM 33.6xUltimate ULTI $56.38 93% $1,559 $5 $56 $1,507 6.6x 5.6x 4.7x 45.1x 36.1x 21.8x NM NM NM NM NMBlackboard BBBB $43.09 86% $1,555 $165 $53 $1,668 3.7x 3.1x 2.8x 14.8x 12.9x 11.1x 26.9x 23.5x 20.1x 17.3x 16.0xJ2 Global Communications JCOM $28.99 94% $1,387 $0 $124 $1,264 4.9x 3.8x 3.6x 9.4x 7.7x 7.0x 14.8x 12.2x 11.6x 14.6x 11.9xRightnow Technologies RNOW $33.10 90% $1,215 $175 $250 $1,141 6.1x 5.0x 4.3x 41.0x 38.5x 23.4x NM NM 40.8x NM NMIntraLinks IL $20.65 64% $1,143 $126 $51 $1,218 6.6x 5.6x 4.8x 19.5x 16.6x 13.9x NM 39.8x 30.5x NM 26.7xLogMeIn LOGM $43.52 88% $1,120 $0 $176 $944 9.3x 7.9x 6.5x 34.3x 31.3x 22.6x NM NM 47.3x 34.8x 31.2xCornerstone OnDemand CSOD $19.31 82% $1,005 $3 $91 $917 19.7x 12.8x 8.6x NM NM NM NM NM NM NM NMDealerTrack TRAK $23.17 86% $988 $0 $58 $930 3.8x 2.8x 2.5x 16.3x 13.7x 11.1x 43.7x 28.7x 25.3x NM 37.1xResponsys MKTG $17.19 96% $954 $0 $72 $883 10.4x 7.5x 6.0x 40.5x 41.2x 36.1x NM NM NM NM NMKenexa KNXA $31.62 95% $806 $37 $20 $828 4.2x 3.1x 2.7x 24.2x 19.1x 14.6x NM 40.2x 30.1x NM 35.9xConstant Contact CTCT $24.05 66% $745 $0 $114 $631 3.6x 2.9x 2.4x 27.5x 18.1x 12.8x NM 38.3x 26.1x NM 34.8xLiveperson LPSN $11.86 88% $678 $0 $67 $611 5.6x 4.6x 3.8x 22.8x 17.5x 14.9x 39.5x 33.6x 28.7x NM 39.9xVocus VOCS $27.24 89% $575 $0 $99 $477 4.9x 4.2x 3.6x 25.6x 25.8x 18.1x 38.4x 35.4x 31.3x 36.9x 33.1xSciQuest SQI $16.48 89% $374 $0 $31 $343 8.1x 6.3x 5.4x 34.3x 33.0x 23.2x 48.5x NM 46.1x 44.0x 28.0xDemandTec DMAN $9.94 71% $346 $0 $67 $278 3.4x 3.0x 2.6x 37.7x 32.0x NM NM NM NM NM NMZix ZIXI $3.81 78% $253 $0 $22 $231 7.0x 6.0x 5.0x 23.5x 18.1x 14.4x 29.3x 24.7x 19.4x 44.4x 22.4xConvio CNVO $11.42 88% $226 $0 $49 $177 2.5x 2.2x 2.0x 19.2x 15.9x 11.9x 30.1x 28.3x 21.4x 40.3x 30.2xSPS Commerce SPSC $16.70 90% $217 $0 $40 $176 4.0x 3.2x 2.7x 33.2x 35.6x 21.2x NM NM 34.7x NM NMAbsolute Software ABT-CA $4.54 98% $214 $0 $30 $184 2.7x 2.4x 2.2x 49.9x 23.4x 24.3x NM NM NM 27.5x 15.5xInContact SAAS $3.97 95% $149 $12 $10 $150 1.8x 1.7x 1.5x 24.5x NM 34.1x NM NM NM NM NMSoundBite SDBT $2.41 73% $40 $0 $34 $6 0.1x 0.1x 0.1x NM NM 20.4x NM NM NM NM NM Median: 6.2 x 5.0 x 4.1 x 27.5 x 24.6 x 19.6 x 38.9 x 34.5 x 30.3 x 36.9 x 32.2 x Mean: 7.3 x 5.7 x 4.7 x 28.8 x 25.6 x 20.4 x 36.2 x 32.0 x 31.1 x 33.9 x 30.4 x20 Source: Company filings, press releases, RBC Capital Markets institutional research, and other Wall Street sources. NM = Not Meaningful. NA = Not Available (1) Based on fully diluted shares outstanding using the Treasury Stock Method (TSM) (2) Enterprise Value = Equity Value + Total Debt + Preferred Stock + Minority Interest – Cash & Cash Equivalents (3) Free Cash Flow = Cash Flow from Operations - Capital Expenditures. Source: FactSet Consensus
  • 22. SaaS Public Comparables (cont’d) (Figures in Millions, except per share data) MRQ EBITDA Revenue Revenue Growth Gross EBITDA Margin EPS FCF 5yr EPS Company 2010A 2011E 2012E 10-11 11-12 Margin 2010A 2011E 2012E 2011E 2010A 2011E 2012E 2010A 2011E GrowthSaaSSalesforce.com $1,627 $2,124 $2,621 31% 23% 80% $313 $359 $546 17% $1.20 $1.30 $1.81 $368 $423 30%Ariba $380 $451 $521 19% 15% 63% $81 $102 $139 23% $0.78 $0.86 $1.12 $63 $71 19%SuccessFactors $206 $281 $337 37% 20% 70% $11 $13 $17 4% $0.07 $0.03 $0.11 $37 $51 26%Concur $307 $368 $450 20% 22% 72% $87 $100 $133 27% $0.78 $0.90 $1.16 $61 $62 23%NetSuite $193 $230 $274 19% 19% 70% $18 $21 $32 9% $0.13 $0.14 $0.28 $12 $21 26%OpenTable $99 $147 $192 49% 31% 72% $35 $55 $79 37% $0.87 $1.16 $1.74 $24 $37 39%RealPage $188 $256 $315 36% 23% 57% $35 $58 $78 23% $0.20 $0.35 $0.49 $17 $40 20%Athenahealth $246 $312 $395 27% 27% 61% $51 $61 $81 19% $0.64 $0.81 $1.09 $25 $23 34%Taleo $242 $310 $357 28% 15% 66% $63 $64 $79 21% $0.78 $0.93 $1.12 $23 $47 20%Ultimate $228 $270 $323 19% 20% 55% $33 $42 $69 15% $0.47 $0.73 $1.13 $21 $25 29%Blackboard $447 $532 $602 19% 13% 65% $112 $129 $151 24% $1.60 $1.83 $2.14 $90 $97 19%J2 Global Communications $255 $336 $356 31% 6% 78% $134 $165 $182 49% $1.96 $2.37 $2.50 $95 $116 12%Rightnow Technologies $186 $226 $267 22% 18% 68% $28 $30 $49 13% $0.49 $0.55 $0.81 $8 $13 20%IntraLinks $184 $218 $254 18% 16% 74% $63 $73 $88 34% $0.26 $0.52 $0.68 $11 $43 28%LogMeIn $101 $119 $145 18% 21% 91% $27 $30 $42 25% $0.85 $0.73 $0.92 $32 $36 24%Cornerstone OnDemand $47 $72 $107 54% 49% 71% ($6) ($11) ($2) (15%) ($1.11) ($0.30) ($0.07) ($2) ($4) 43%DealerTrack $244 $327 $368 34% 12% 44% $57 $68 $84 21% $0.53 $0.81 $0.92 ($9) $27 15%Responsys $85 $118 $146 39% 23% 51% $22 $21 $24 18% $0.20 $0.17 $0.20 $11 $8 25%Kenexa $196 $270 $307 38% 14% 61% $34 $43 $57 16% $0.62 $0.79 $1.05 $9 $22 21%Constant Contact $174 $218 $267 25% 23% 71% $23 $35 $49 16% $0.38 $0.63 $0.92 $8 $21 53%Liveperson $110 $133 $160 21% 20% 73% $27 $35 $41 26% $0.30 $0.35 $0.41 $6 $17 23%Vocus $97 $114 $131 18% 15% 80% $19 $18 $26 16% $0.71 $0.77 $0.87 $16 $17 24%SciQuest $42 $54 $63 28% 16% 77% $10 $10 $15 19% $0.34 $0.27 $0.36 $9 $13 NADemandTec $82 $94 $109 15% 16% 66% $7 $9 $4 9% ($0.03) $0.06 $0.16 ($9) $1 17%Zix $33 $39 $46 18% 19% 80% $10 $13 $16 33% $0.13 $0.15 $0.20 $6 $11 23%Convio $70 $79 $91 13% 15% 60% $9 $11 $15 14% $0.38 $0.40 $0.53 $6 $7 16%SPS Commerce $45 $55 $66 24% 20% 74% $5 $5 $8 9% $0.31 $0.26 $0.48 $3 $4 23%Absolute Software $68 $76 $85 12% 11% 73% $4 $8 $8 10% ($0.11) ($0.04) ($0.02) $8 $14 NAInContact $82 $88 $98 7% 12% 41% $6 $2 $4 2% ($0.03) ($0.12) ($0.04) $1 ($2) NASoundBite $39 $38 $38 (4%) (1%) 59% ($0) ($1) $0 (3%) ($0.11) ($0.16) ($0.07) ($2) ($2) NA Median: 22% 18% 70% 18% 23% Mean: 24% 18% 68% 18% 25%21 Source: Company filings, press releases, RBC Capital Markets institutional research, and other Wall Street sources. NM = Not Meaningful. NA = Not Available (1) Based on fully diluted shares outstanding using the Treasury Stock Method (TSM) (2) Enterprise Value = Equity Value + Total Debt + Preferred Stock + Minority Interest – Cash & Cash Equivalents
  • 23. RBC Capital Markets Technology Group – Notable Recent Transactions has agreed to acquire $1,675,000,000 has agreed to acquire $170,000,000 $300,000,000 $100,000,000 $300,000,000 $86,250,000 Acquisition Financing Senior Credit Facilities In support of the acquisition of Initial Public Initial Public Initial Public Initial Public In support of the acquisition by: Undisclosed $745,000,000 Offering Offering Offering Offering Financial Advisor to Financial Advisor to Joint Lead Arranger & Joint Apax Partners and Lead Sole Bookrunner Sophos Bookrunner Arranger on Financing Co-Manager Co-Manager Co-Manager Co-Manager Pending Announced May 2011 Announced April 2011 Announced March 2011 In Registration In Registration In Registration In Registration has acquired has acquired has agreed to acquire has received an equity investment from $770,000,000 $783,000,000 $189,750,000 $83,750,000 Senior Credit Facilities Initial Public Initial Public Follow-on In support of the Company’s Offering Offering Offering $1,220,000,000 Refinancing $2,000,000,000 $25,000,000 $2,200,000,000 Private Placement Joint Lead Arranger, Joint Financial Advisor & Joint Financial Advisor to Apax / Lead Financial Advisor to Bookrunner & Bookrunner on Senior Credit Senior Co-Manager Co-Manager Senior Co-Manager Arranger on Debt Financing iGate and Joint Bookrunner Sole Placement Agent Syndication Agent Facilities May 2011 May 2011 May 2011 May 2011 May 2011 May 2011 April 2011 April 2011 has received an equity investment from $2,500,000,000 $850,000,000 has been acquired by $91,943,000 $172,750,000 $215,000,000 $81,000,000 Sr. Credit Facilities & Senior Credit Facilities Sr. Notes Follow-on Offering Follow-on Offering Initial Public Senior Credit Facilities $400,000,000 In support of the Company’s Offering A portfolio company of recapitalization $50,000,000 ABL Facility Undisclosed In support of the acquisition by: Joint Lead Arranger, Joint Private Placement Bookrunner & Joint Lead Arranger & Joint Syndication Agent Financial Advisor to NewScale Senior Co-Manager Sole Placement Agent Co-Lead Manager Bookrunner Co-Manager Co-Manager April 2011 April 2011 March 2011 February 2011 January 2011 January 2011 January 2011 January 2011 $266,500,000 $1,370,000,000 $230,000,000 $190,000,000 $225,000,000 $400,000,000 $300,000,000 has been acquired by Follow-On Offering Senior Secured Credit Senior Credit Facilities Senior Credit Facilities Senior Secured Credit Term Loan / Credit Senior Credit Facilities Facilities A portfolio company of In support of the acquisition of MDA $135,300,000 Facilities Facility Info Products by: In support of acquisition of: In support of the acquisition by: $152,000,000 A portfolio company of Initial Public A portfolio company of Offering Joint Lead Arranger & Joint Joint Lead Arranger & Joint Senior Co-Manager Joint Lead Arranger & Joint Financial Advisor to Bookrunner Bookrunner Joint Lead Arranger & Bookrunner December 2010 (Follow-On) Bookrunner Phoenix Underwriter Co-Arranger & Syndication Agent December 2010 December 2010 December 2010 / August 2010 (IPO) November 2010 November 2010 November 2010 October 2010 has acquired has been acquired by $810,000,000 $2,250,000,000 $700,000,000 $660,100,000 $324,000,000 $300,000,000 Acquisition Financing 5.375% Senior Notes Senior Notes Sr. Credit Facilities Senior Secured Initial Public In support of acquisition by: Notes In support of the acquisition by: Offering $72,500,000 $135,000,000 $1,000,000,000 In support of the acquisition by: A portfolio company of 3.875% Senior Notes Financial Advisor to Financial Advisor & Bookrunner on Joint Bookrunner Financing Co-Manager Co-Manager Joint Senior Bookrunner Lead Arranger & Sole Bookrunner Joint Bookrunner Phyworks September 2010 July 2010 July 2010 July 2010 July 2010 July 2010 July 2010 July 201022
  • 24. RBC Capital Markets Technology Group – Senior Bankers Technology Investment Banking Ron Eliasek Managing Director Group Head (212) 437-9083 ron.eliasek@rbccm.com Louis Draper Tim Karman Marc Layne P.A. Weiner Managing Director Managing Director Managing Director Managing Director Software Internet Communications Technology Financial Technology (415) 633-8566 (415) 633-8584 (212) 428-2302 (212) 905-2906 louis.draper@rbccm.com tim.karman@rbccm.com marc.layne@rbccm.com pa.weiner@rbccm.com David Ramazetti Dean Gels Robert Lee Sean McCarthy Director, Software Director Director, Semiconductors Director (415) 633-8521 (212) 428-6555 (415) 633-8597 (212) 905-2944 david.ramazetti@rbccm.com dean.gels@rbccm.com robert.lee@rbccm.com sean.mccarthy@rbccm.com Product Specialists Jevan Anderson Peter Gant Paul Nagle Michael Noonan Managing Director Managing Director Managing Director Managing Director Mergers & Acquisitions Mergers & Acquisitions Investment Grade Debt Equity Capital Markets (415) 633-8542 (415) 633-8527 (212) 618-7733 (212) 618-8196 jevan.anderson@rbccm.com peter.gant@rbccm.com paul.nagle@rbccm.com michael.noonan@rbccm.com David Wirdnam Michael Rosso Nicholas Daifotis Devon Ritch Managing Director Managing Director Managing Director Director Leveraged Finance Equity Private Placements High Yield Debt Mergers & Acquisitions (212) 858-8314 (415) 633-8653 (212) 618-2201 (212) 437-9073 david.wirdnam@rbccm.com michael.rosso@rbccm.com nicholas.daifotis@rbccm.com devon.ritch@rbccm.com23